Unjumbling the mysteries of Medicare

By Ted Foster

I love crossword puzzles. Yes, they can be frustrating (to say the least!), but the process of untangling clues to discover the often curious words that fit perfectly into each puzzle brings me a great sense of satisfaction and even joy. (A church alcove that contains the altar is an “Apse.” Who knew?) Perhaps it’s no wonder that one of my specialties is helping our clients unjumble the many mysteries of Medicare.

Just like crossword puzzles, Medicare has its own unique and sometimes confusing language. Part A covers medical facilities. Part B covers medical providers. Part C includes Medicare Advantage plans that are private alternatives to Parts A and B. And Part D covers prescription drug plans and is used to supplement coverage gaps. Then there are the supplements, Plans A through N (not to be confused with the Parts!), which introduce a whole new world of confusion. From the choices for care, to the choices for drug coverage, to the choices for paying for the choices, it can make even a crossword lover start to feel overwhelmed.

Open enrollment for Medicare ends on December 7^th. That means that now is the time to clarify some of the confusion and start solving your own Medicare puzzle before it’s too late. Here are five rules of thumb to help you start making smart Medicare decisions right away:

1. If you’re nearing 65, let the mail pile up. A funny thing happens in the months leading up to your 65^th birthday. Suddenly your mailbox is overflowing with mailers telling you “everything you need to know” about Medicare. No matter how official these letters and packets appear, they are not from the government. These are marketing pieces from Medicare Advantage plan providers who are legally prohibited from calling you directly—at least until they can persuade you to call them. Their mission is to entice you with the important-looking forms and slick informational packets that they send out to the long list of everyone who is turning 65 within the next year (for which they pay big bucks). Ignore it all.

2. Two to three months before you turn 65, sit down with your advisor. After you’ve recycled all the junk mail, sit down with an advisor (not a salesperson) who knows the complex workings of Medicare. Many of the decisions you make in your first enrollment period can’t be undone—meaning that you can’t fix a poor decision later on. Work with someone who can unjumble the language and help you understand your options clearly, and then choose the most appropriate selections for your own situation.

3. Determine if you need Medicare Part B. Nearly everyone is eligible for Medicare Part A, which covers hospitalization. Medicare Part B is a bit trickier. If you are no longer working, you do need Part B to cover doctor’s visits and other non-hospital medical care. If you’re continuing to work after age 65 and your employer has more than 20 employees, you do not need Part B; your employer-sponsored benefits will provide the coverage you need. If your employer has less than 20 employees, you do need Part B to get appropriate medical coverage.

   Whatever choice you make, if you’re already collecting Social Security, you must email or call the Social Security Administration to opt in or out of Part B (I recommend calling to be certain your request is handled properly). If you are not yet collecting Social Security and you do need Part B, you must call to opt in and to schedule your quarterly payments of about $400. (Not surprisingly, scheduling payments is one thing the Social Security Administration is quite good at facilitating.)

4. Select a drug plan. There are multiple drug plans available, offering a variety of types and levels of coverage. A Medicare advisor can compare each plan based on your current prescriptions to help select what’s best for you. If your needs change, you have the option to change your plan during each annual enrollment period.

   Note that it’s important to select a plan even if you don’t need it right away. Signing up after your initial enrollment triggers monthly penalties that last a lifetime. To avoid those penalties down the road, select the lowest cost plan from day one (about $34/month). Even if you don’t need to use the plan immediately, you’ll save money in the long run.

5. Think twice about choosing a Medicare Advantage Plan. Remember all those mailers you recycled? If you peeked at them at all, you know all the nice benefits they include. Lower premiums. Free SilverSneakers gym memberships. Impressive drug plans. These benefits can be very attractive benefits for seniors—as long as you’re healthy. The problem is that the costs of these plans skyrocket with your first hospital stay, quickly wiping out any savings on premiums. Plus, the Medicare system makes it very challenging to unwind your decision and go back to a basic Medicare plan that would reduce your out-of-pocket costs. A Medicare Advantage Plan may work for some, but be sure it’s the best decision for you before opting out of Medicare Parts A and B.

It’s easy to feel intimidated by the Medicare puzzle. By taking these simple steps today, you can make the best possible choices from the start, and put a plan in place to stay on track as your healthcare needs change over time.